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As at 31 August 2023, the Group had unaudited cash and short-term deposits of approximately £4.0 million.
In addition Sound can drawdown a further of £1.5 million of the £4.0 million senior unsecured convertible bond.
Fernan10, have you taken these figures into account in your calculations?
What cash position do you think Sound will have at the end of 2023?
Graham says that the cash position at present is the best that it has been for a long time.
I still have some doubts in relation to the terms of the Afriquia loan.
If SOU reduces its equity interest in the project, from 75% to 35%, it could be possible that the loan must be proportionately reduced. In that case, Afriquia could ask that the US$ 8 million of back costs to be received from Calvalley be applied to the partial repayment of the loan.
Regards
Excellent summary Fernan10.
So I am to understanding correctly that should we receive news of the Calvalley deal being across the line ('this quarter' as Graham mentions in interview this week) and with the collection of the US$ of 8 million back costs collected - Sound would be fully funded for 2024 should Phase 1 production slip to that extent?
One of bonds outstanding is in euros, not pounds.
Here are the current calc of funding required for 2024, should the phase 1 revenues are delayed until the end of next year:
FUNDING REQUIREMENTS FOR 2024
G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million X 1.23= US$ 3.1 million
Bond amortization due June 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million
Bond amortization due Dec 2024: €25.32 million X 5%: €1.25 million X 1.06= US$ 1.32 million
Interest on bond payable in cash: €25.32 million X 2%: €0.5 million X 1.06= US$ 0.54 million
Total funding needs for 2024: US$ 6.3 million
Regards
Management has stated that, after the issue of the convertible bonds last June, our liquidity needs are met until end 2023.
If phase 1 revenues from Tendrara are delayed until the end of 2024, we will have a funding gap of c. US$ million 6.9 next year, as follows:
G&A expenses (£1.25 million per semester, similar to 1H 2023): £2.5 million
Bond amortization due June 2024: £25.32 million X 5%: £1.25 million
Bond amortization due Dec 2024: £25.32 million X 5%: £1.25 million
Interest on bond payable in cash: £25.32 million X 2%: £0.5 million
Total funding needs for 2024: £5.5 million X 1,25= US$ 6.9 million
It seems management plans to fund these expenditures with the receipt of US$ 8 million of phase 1 past costs from Calvalley (US$ 8 million net to Calvalley):
From the 1H 2023 report:
“In June the Company raised up to £4.0 million by way of a senior unsecured convertible bond instrument. The proceeds will, if fully drawn, provide funds for the Company to continue to execute its Phase 1 development of the Tendrara Production Concession and bridge group working capital liquidity ahead of receipt of a receivable as disclosed in the year end results and/or receipt of Phase 1 back costs from Calvalley if a partial divestment is ultimately completed.”
One expenditure that is still unfunded is the drilling of a mandatory exploration well in the Anoual license. We need to drill that well by January 2024 (see company´s news release on Dec 22, 2022)
The fact that Calvalley took a conservative approach in the farm out process (agreeing to fund only development expenditures and the drilling of the TE-4 exploration well, close to the planned infrastructure, and in both cases subject to a certain cap) was clearly a disappointment to management´s exploration plans. I´m sure SOU´s management had hoped to see the farm in partner funding the 3 high graded exploration prospects ready for drilling (SBK-1, TE-4 and M5 in the Anoual permit) instead of just 1.
This lack of interest in funding the M5 prospect (in spite of its attractive economics in the success case) also cast a shadow over the real value of the remaining prospects in the Tendrara and Anoual licenses.
Regards
Fernan
Graham was cool, he says the whole Truth and nothing but the Truth and I really mean it, like he said in so many words, “ He was generally going over again what’s been happening, plus half year results, the cold boxes being the newest example but 2024 is when it starts coming in “
Again to me after the Project progress meeting in Italy held recently with Calvalley, Sound Energy and Italifluid senior management including Mr DiPaulo - principal of ITAL fluids. Project is advancing well. #Tendrara #meeting #project. Great relationship and both looking for the same things. This project is getting Bigger and Bigger and like most companies recovering from Covid, Sound need money and now we’ve got it from the biggest bank in Morocco, that’s amazing they don’t need to if they don’t want to, reason is it has to be Big and successful. At the moment Sound share price is amazing, cheep as chips but with a more than healthy future, if I was a Billionaire I would be buying Billions at such a minute price, instead I aim to be a Millionaire like many Brothers.
Buy Buy Buy.
Good summary Ps. Another deadline looks to be missed. Hard to understand that the site foundations have been prepared for months with no equipment ready to go on them. Like building a house foundation and waiting six months for the bricks to turn up. Bad planning considering the urgency to get the plant up and running for Morocco and providing cash flow to Sound. Coordination with the contractors to get the site producing as quick as possible seems lacking to me. Pleased to see KBR involved in the flow line design, as having worked for them, feel confident they will do a good job.
Anyway, another waiting game by the looks of it
Before you try to spin this 'biggest loan ever for a gas project' means in Morocco!
You mean saying things like:
we'll get the tax issues sorted. guess what - they did.
we'll attract a partner - guess what - they did
we'll execute phase1 - guess waht - they are, all components complet, many is Spain awaiting delivery to site.
we'll get the biggest loan ever for a gas project - guess what - they did.
that's not even the complete list, but even this short list shows a hell of a lot of delivery on promises to me!
You never seem to learn ktf. He’s said and written a lot over the last few years, very little has proven to come to fruition. Mailed on the next RNS is A deadline extension. This is the way.
Edit: he says it at 4:20 in
Mentioning GL saying at 7:20 in the interview that deal with calvalley this quarter been removed?
check the interview.
A bit disappointing from SOU. Looks like the Phase 1 timeline is substantially behind schedule. "Our contractor and its sub-contractors designing and constructing plant equipment for delivery to site late 2023, early 2024". That is a very vague estimate given that it's only a couple of months away. I would imagine there is a lot of on-site work involved in installation, assembly, testing and commissioning. "Phase 1 LNG delivery scheduled to commence in 2024". The fact that it says 2024 and not Q1 2024 speaks volumes.
Some of the payments to ItalFluid are tied to the go-live date, so are presumably not a problem. But the bondholder amortisastion payments are every six months starting in December. Looks like SOU will have to stump up for at least one additional one, and maybe two, before Phase 1 revenue starts flowing. Not to mention keeping the lights on without gas revenue for possibly an additional year. When SOU start getting handwavey about deadlines that are ostensibly only months away, precedent strongly suggests that they will come in a mile behind schedule.
Some people just won’t be told…..but anyway, if you need anymore evidence GL=JP and he’s not 1% motivated by SH value (why would you be with such a cult of investors onboard?) is his interview today. Not once did he refer to SH, SH support or the sp, and the kicker is he signs off that they’re in it to benefit Morocco. Like I said this is about the company and by virtue Morocco. He couldn’t give a stuff about dilution to existing SHs. To be honest, nor it seems so existing SH either. I suspect when all is said and done there will be HUGE disappointments and further giveaways if and when the CalVal, drill programme, and Phase 2 funding negotiations are finalised. There were enough breadcrumbs in todays two releases for even the cult members to see that!!
Graham Lyon discusses Interims announced this morning :
https://youtu.be/te_69vlM9mc
As per the farm-out agreement, Calvalley will fund 100% of the TE-4 Horst well costs up to a cap of US$7 million
The prospect is located very close to the infraestructure to be built for the Tendrara production concession. In case of success, it could be developed with minimal aditional OPEX and CAPEX. It will only require the drilling of a few development wells, flowlines and a short pipeline to connect with the central facilities.
The gas will eventually be sold to Europe, according to what was stated today by management:
Note 4 to Financial Statements for 1H 2023:
"At 30 June 2023 the Company has used average TTF prices only since future gas sales contracts the Company is likely to enter into are expected to be priced in reference to TTF and in addition, the Company received an indicative non-binding gas pricing term sheet referenced to TTF"
“The average TTF and NBP gas price projections for the period to 2032 was 14.45 US$/MMBtu.”
Calc of economic benefit for the success case
Gas in place (gross): 260 bcf
Recoverable resource (gross): 50% of gas in place (similar to the TE-5 horst)= 130 bcf
Selling price: US$ 14,45/mcf
CAPEX: US$ 100 million (conservative)
Undiscounted free cash flow (gross): (130 bcf x US$ 14,45/mcf) x (1-royalty 3,5%) - CAPEX US$ 100 million= US$ 1.712
Undiscounted free cash flow (net to SOU):
US$ 1.712 million X 35% X (1- Schlumberger's net profit interest 10%)= US$ 540 million.
Regards
Assume you’ve read the SP Angel note from this morning? Enough said.
And the market cap of ALL of Sound including ALL exploration upside etc etc is 18 million!
value and potential staring everyone in the face here.
From today´s press release:
Note 4 to Financial Statements for 1H 2023:
"At 30 June 2023 the Company has used average TTF prices only since future gas sales contracts the Company is likely to enter into are expected to be priced in reference to TTF and in addition, the Company received an indicative non-binding gas pricing term sheet referenced to TTF"
“The average TTF and NBP gas price projections for the period to 2032 was 14.45 US$/MMBtu.”
We have 195.3 bcf (gross) of uncontracted gas reserves. 68.3 bcf net to SOU, under the farm out agreement with Calvalley.
SP Angel assigned to those reserves a conservative sales price of US$ 9/mcf (June 15, 2023 report).
If we can sell that gas to Europe, the tax-free upside in EBITDA (net to SOU) is:
68,3 bcf X (US$ 14,45/mcf – US$ 9/mcf)= US$ 372 million
Regards
Fernan
Like the man said,
'The next key steps to progress phase 1 include final design, engineering, procurement and installation of the flowline system and associated well head facility equipment for the gas gathering system to transport the gas from the well heads to the mLNG plant.'
Then as if by magic, a tweet of the LNG manufacturing cryogenic unit being installed.
This project in on course to be completed by the end of the year and cash flows in 2024. Cash inflows resulting from the Calvalley deal will address any concerns over finances at the end of this year.
IMO this situation is better than it has been for years here at Sound Energy.
I don’t think some realise this is happening or the phase 2 . I wonder what is happening at sidi maybe another partner or one we have on board already? Hopefully some interesting news soon , please
It's amazing the lengths sound will go to keep the 'work of fiction' in kylie's words of the mLNG project going 😊
looks liek a very real project to me 😊
Good Luck